Monday’s analyst upgrades and downgrades

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Inside the Market's roundup of some of today's key analyst actions

Though he remains "comfortable" with its longer-term outlook, Canaccord Genuity analyst Aravinda Galappatthige downgraded Cogeco Communications Inc. (CCA-T) to "hold" from "buy" based largely on price appreciation.

"In our view, Cogeco's U.S. cable business derives a valuation of 7.0 times at CCA's current share price," he said. "Considering the Holdco structure (resulting from the Caisse's 21-per-cent ownership of ABB) and peer valuations, we see limited upside in the near term. Further, in light of FQ4/17 results we do not expect Canadian cable EBITDA to grow more than 1.5-2 per cent. We note that while Cogeco is far less affected by the aggressive urban fibre rollout of the Telcos, we are starting to see initial signs of a momentum shift towards the Telcos, once again, led by new product launches and promotional activity. While we do not want to read too much into a single quarter, we do expect a bit more Canadian cable subscriber pressure for Cogeco than we saw through most of F2017."

On Friday, the Montreal-based company reported fourth-quarter consolidated revenue of $552-million, slightly below both Mr. Galappatthige's projection ($556-million) and the consensus estimate ($558-million) despite increasing 1.4 per cent year over year. EBITDA of $247-million also missed his estimate of $251-million (also the consensus).

"While Cogeco maintained its F2018 guidance, given that it is based on an exchange rate of $1.33 CAD/ USD ($1.32 in 2017) and the slightly softer trends we saw in Q4, we expect some modest downside during the year," the analyst said. "The company estimates $12-million in EBITDA downside if one uses the current exchange rate of 1.28.

"U.S. cable [is] well positioned. While EBITDA growth in USD was a little mild at 3.9 per cent, we remain comfortable with the US business, particularly the solid internet growth, as well as the healthy mid-single digit organic revenue growth trends. We expect that the advent of MetroCast in early FQ2/18 would add an additional driver to the segment, as Cogeco focuses on capitalizing on the video and B2B opportunities in those territories."

He added: "We have increased our F2018 estimates, primarily because we now expect 8 months of contribution from MetroCast vs. our previous 7.5 months assumption. In addition, we have raised our USD ARPU assumptions given pricing power resiliency in ABB's markets. Note that we use an avg. exchange rate of CAD/USD 1.30 in our forecasts vs. F2018 preliminary guidance at 1.33."

Though the stock is up 37 per cent year to date, Mr. Galappatthige elected to raise his target price to $93 from $89. The analyst average target is currently $91.95, according to Bloomberg data.

Elsewhere, Desjardins Securities analyst Maher Yaghi raised his target to $92 from $87.50 with a "hold" rating (unchanged).

Mr. Yaghi said: "While the stock still trades at a discount vs peers, we believe this is warranted given the company's lack of a wireless service and slow organic growth. In our view, CCA's high indebtedness will make the buy strategy harder to deploy in the upcoming quarters, leaving few catalysts in the short to medium term. We are supportive of the company's U.S. strategy but believe the Canadian market is not getting any easier for a cable-only provider."

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Desjardins Securities analyst Doug Young is projecting average cash earnings per share growth for Canada's Big 6 banks of 7 per cent year over year in the fourth quarter.

In a preview of the sector's earnings season, scheduled to begin on Nov. 28 with Bank of Nova Scotia, Mr. Young said Canadian P&C banking will an important area of focus.

"While most banks have already provided some guidance on mortgage loan growth expectations, we will be looking for any updates following the finalization of the Guideline B-20 update on Oct. 17," he said. "With two rate hikes by the Bank of Canada now in the bag, will the banks provide additional information on interest rate sensitivity? For the Big 6 banks in 4Q FY17, we expect loan growth of 5 per cent year over year, a 1 basis point increase in NIMs [net interest margins] on average both quarter-over-quarter and year-over-year, a 106 basis points year-over-year decline in NIX ratios (up 76 bps quarter over quarter) and a PCL rate down 2 bps year over year (up 1 basis points quarter over quarter).

"Another area of focus will be credit, especially with the implementation of IFRS 9 looming on the horizon. For 4Q FY17 we forecast an average consolidated PCL rate of 0.28 per cent for the Big 6 banks, up 2 basis points quarter over quarter but down 1 basis points versus last year. Crude oil prices have moved progressively higher over the quarter, which bodes well for the unemployment rate in oil-reliant provinces (Alberta, Saskatchewan and Newfoundland). Starting with 1Q FY18, the Big 6 banks are required to report earnings under IFRS 9, which recognizes credit losses under an 'expected loss' model vs an incurred model. The change is expected to result in earlier recognition of losses on loans and could generate increased volatility in earnings. Given disclosure by banks in Europe, we believe there could be an impact on capital and will look for guidance as to what that might be."

Mr. Young adjusted his estimates for the banks while releasing his 2019 fiscal estimates. He's now projecting quarterly dividend increases for Bank of Montreal (2 cents to 92 cents), Laurentian Bank of Canada (1 cent to 63 cents) and National Bank of Canada (2 cents to 60 cents).

"Since the end of August, Canadian bank stock prices have been on a tear. While the banks were up just 0.6 per cent year-to-date on average through the first eight months of the year, stock prices jumped 8.9 per cent on average from Sept. 1–Oct. 31," the analyst said. "Overall, during 4Q FY17, bank stock prices increased an average of 9.1 per cent (on a market cap–weighted basis) in the period from August–October 2017, outperforming all of the other North American financial services indices we follow. For the quarter ended October 31, 2017, CWB was the best-performing bank stock, with a 29.8-per-cent price return, while BMO lagged in terms of price performance, up 4.5 per cent for the period.

"After the strong price performance in 4Q FY17, the Big 6 Canadian banks are trading above 20-year historical average P/4QF EPS multiples on average. One could question whether a premium multiple is warranted given a number of headwinds and concerns: highly-indebted consumers; various changes in mortgage rules (most recently the Guideline B-20 revisions) that will likely slow growth in the largest loan class on the banks' books; uncertainty around the potential impact on credit provisioning of adopting IFRS 9 in 2018; potential for further regulatory capital rule tightening by BCBS or OSFI; and risks to the Canadian economy should NAFTA get ripped up. However, relative to the S&P/TSX, bank valuation multiples look interesting (the P/E gap has widened); the group would benefit from further interest rate hikes in Canada and the U.S.; there is value in the scarcity of good financial services stocks; and over the past 3–4 years, the banks have been able to work through a number of concerns we have had—a testament to their diverse operations, in our view."

Mr. Young made the following target price changes to stocks in his coverage universe:

- Bank of Nova Scotia (BNS-T, "buy") to $89 from $87. Consensus: $87.31.

- Canadian Imperial Bank of Commerce (CM-T, "buy") to $128 from $126. Consensus: $119.

- Royal Bank of Canada (RY-T, "buy") to $108 from $106. Consensus: $103.31.

- Toronto-Dominion Bank (TD-T, "hold") to $76 from $74. Consensus: $74.94.

- Bank of Montreal (BMO-T, "hold") to $102 from $100. Consensus: $101.38.

- National Bank of Canada (NA-T, "hold") to $62 from $60. Consensus: $62.69.

- Laurentian Bank of Canada (LB-T, "hold") to $60 from $57. Consensus: $60.73.

- Canadian Western Bank (CWB-T, "hold) remained $35. Consensus: $35.04.

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Investors in the real estate sector should focus on the quality of properties and the stability and growth prospects of cash flows, according to Echelon Wealth Partners analyst Frederic Blondeau.

"Despite the potential negative impact from higher interest rates on the sector's sentiment, as well as on underlying valuations, we would emphasize two potential positives for Canadian REITs for the rest of 2017 and for 2018: 1) The lack of investment alternatives, especially to the real assets space, in what seems to remain a low inflation environment; 2) Real Estate's relatively solid prospects compared to other sectors. In fact, our REITs sector coverage reflects our long-term positive biases towards four Real Estate asset classes, namely Multi-Family, Senior Living, Industrial, and Healthcare. In addition, we currently favour REITs with an international exposure, as we feel the CAD remains expensive and that the Canadian macroeconomic environment still remains unattractive," he said.

In a research report released late Friday in which he initiated coverage of 20 Canadian-listed real estate investment trusts and real estate operating companies, Mr. Blondeau noted REITS have "slightly" underperformed thus far in 2017 with S&P/TSX Capped REIT Index (SPRTRE) generating a 5.4-per-cent total return, which is 0.6 per cent less than the TSX.

"We note that the REITs' underperformance since the beginning of September now totals 317 basis points," he said. "During that time, the 10-year UST increased from 2.17 per cent to 2.46 per cent," said Mr. Blondeau. "Although overall Trump's extended tantrum, seen since the U.S. elections in November last year, somewhat supports our cautious stance on REITs, in 2017 it became increasingly clearer that the Trump trade began to falter, to a point where the 10-year UST yield was hovering around the 2.05-2.25-per-cent mark again, at the beginning of September. Since then, the 10-year UST moved above the 2.40-per-cent mark, further underlining the volatility/irrationality on the fixed-income side. In regards to the Bank of Canada (BoC), despite its latest intervention, we believe the BoC should remain biased toward less expansionary measures in the mid-term.

"In our opinion, currently, one of the challenges for REITs investors, from a top-down perspective, among other factors, has been to balance between two conflicting aspects: First … the faltering Trump trade, and thus the demand for higher-yield vehicles that remain solid, especially within sub-sectors we favour, namely Multi-Family, Industrial and Senior Living, as well as internationally exposed Canadian REITs; and Second, the potential residual risks for REITs stemming from interest rates volatility (expectations of central banksprogressive unwinding, combined with the effects of the Trump trade/political agenda) and from a rather strong correlation between Canadian REITs and broader Canadian equity indices, combined with what we would perceive as rising global macroeconomic and systemic risks."

The analyst initiated coverage of the following equities:

Multi-Residential

- Canadian Apartment Properties REIT (CAR.UN-T) with a "hold" rating and $34.25 target. Consensus is $36.16.

- Boardwalk REIT (BEI.UN-T) with a "hold" rating and $40 target. Consensus is $42.95.

- Northview Apartment REIT (NVU.UN-T) with a "hold" rating and $23 target. Consensus is $22.96.

- Killam Apartment REIT (KMP.UN-T) with a "buy" rating and $14.50 target. Consensus is $13.95.

- Morguard North American Residential REIT (MRG.UN-T) with a "buy" rating and $16.50 target. Consensus is $16.83

- InterRent REIT (IIP.UN-T) with a "buy" rating and $9 target. Consensus is $8.85.

- Pure Multi-Family Apartment REIT (RUF.U-X) with a "buy" rating and $6.75 (U.S.) target. Consensus is $7.30.

Mr. Blondeau said: "Multi-Family is currently our favourite real estate sub-sector. The Canadian Multi-Family subsector remains vibrant and healthy despite new regulations and increasing supply. What we have seen so far is a constant readjustment of the market following the newly implemented laws in Toronto and Vancouver. In other words, despite the government's best intentions to increase rent affordability, what we have seen is a communicating vessels scenario in which capital moves from one city to another. At present, eastern cities such as Montreal and Ottawa are investors' new targets, with their appetite causing home prices to substantially increase in those cities, paving the way for a strong rental market. Some investors are simply waiting for the Toronto and Vancouver markets to fully absorb the impact of the new laws, after which housing prices should likely go back to a solid uptrend. Put differently, the recent impact we have witnessed on prices and number of transactions trending lower could only be temporary. In this context, InterRent (IIP.un, Buy, Top Pick) is our favourite name, while we rate Killam Properties (KMP.un) as Buy."

Senior Living

- Sienna Senior Living Inc. (SIA-T) with a "buy" rating and $19 target. Consensus is $18.81.

Diversified

- Cominar REIT (CUF.UN-T) with a "buy" rating and $14 target. Consensus is $14.17.

- Artis REIT (AX.UN-T) with a "hold" rating and $13.50 target. Consensus is $13.78.

- BTB REIT (BTB.UN-T) with a "hold" rating and $4.50 target. Consensus is $4.68.

Industrial

- Pure Industrial REIT (AAR.UN-T) with a "buy" rating and $7.30 target. Consensus is $7.04.

- Dream Industrial REIT (DIR.UN-T) with a "buy" rating and $9.50 target. Consensus is $9.38.

- Summit Industrial Income REIT (SMU.UN-T) with a "hold" rating and $7.25 target. Consensus is $7.42.

- Nexus REIT (NXR.UN-X) with a "buy" rating and $2.40 target. Consensus is $2.37.

Office

- Allied Properties REIT (AP.UN-T) with a "hold" rating and $40 target. Consensus is $43.61.

- Dream Global REIT (DRG.UN-T) with a "buy" rating and $11.50 target. Consensus is $11.28.

- Northwest Healthcare Properties REIT (NWH.UN-T) with a "buy" rating and $11.50 target. Consensus is $11.55.

- Inovalis REIT (INO.UN-T) with a "hold" rating and $9.75 target. Consensus is $10.90.

Mr. Blondeau said: "The office sub-sector remains healthy, in most regions. The Office sub-sector is relatively stable at the moment, although we are concerned with the somewhat high overall vacancy rate of 12.8 per cent, as well as the 10.4 million square feet under construction at the end of Q3. That said, according to CBRE, year-to-date overall office space net absorption remained solid in Q317 in Canada at 6.0 million sq. ft."

"Despite signs of improvement and relatively strong fundamentals, the Office sub-sector is an asset class on which we are currently relatively cautious. With 'off the charts' vacancy rates in Alberta and construction in other major cities such as Toronto (where an additional 25.3 million sq. ft. are currently being planned to be built), new technologies and changing corporate habits lead us to believe that vacancy could remain stable in the foreseeable future and that lease rates could be negatively affected in the mid-term."

Mortgage Investment Corp.

- Firm Capital MIC (FC-T) with a "buy" rating and $14.25 target. Consensus is $14.

On the real estate sector as a whole, Mr. Blondeau said: "We currently favour REITs with an international exposure, as we feel the CAD remains expensive and that the Canadian macroeconomic environment still remains unattractive. We would thus see year-to-date weakness in the USDCAD as a buying opportunity for our Buy-rated names exposed to foreign currencies, namely Pure Multi-Family (RUF.UN, Buy), Morguard North American Residential REIT (MRG.UN, Buy), and Pure Industrial REIT (AAR.UN, Buy), even following the rebound seen since the beginning of September. We would also mention Northwest Healthcare (NWH.UN, Buy) and Dream Global REIT (DRG.UN, Buy), both exposed to the EUR while NWH is also exposed to the AUD and BRL. Lastly, generally speaking, we see better valuation levels within the small to mid-size capitalization REITs."

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Touting its "considerable" growth profile and declining cost structure on higher grades, Raymond James analyst Farooq Hamed initiated coverage of Vancouver-based Ero Copper Corp. (ERO-T) with an "outperform" rating.

"ERO's copper production growth is the highest amongst our coverage group and is expected to grow at a 23-per-cent CAGR [compound annual growth rate] through 2021," said Mr. Hamed. "Operating costs are expected to decl ine over the period falling into the first quartile of the global copper cost curve in 2021. Further, we expect significant reserve and resource growth at its MCSA mine complex given the exploration success ERO has had during its brief ownership of the ass et which hosts three copper bearing districts in a large land package that has had minimal historical exploration activity. We acknowledge that on near term metrics ERO looks to be fully priced however, given the considerable production growth and potential for mine life extension we believe there is further upside to ERO's valuation."

He set a price target for the stock of $7.

Elsewhere, BMO Nesbitt Burns analyst Alex Terentiew gave the stock an "outperform" rating with a $8 target price.

"Ero is a growth story, something rarely found today among copper producers, with strong potential for additional discoveries, resource expansion, and higher grades," said Mr. Terentiew. "Over the next few years, we see Ero emerging as a growth- and cost-leader in the copper industry, ideally positioned to capitalize on a tightening copper market in the long term."

Scotia Capital initiated coverage with a "sector outperform" rating and $6.25 target.

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A strong third quarter strengthens the outlook for Asanko Gold Corp. (AKG-T), according to Clarus Securities analyst Nana Sangmuah.

Citing "increasing" confidence in the Vancouver-based producer, he raised his rating for its stock to "buy" from "hold."

"AKG announced a strong Q3/17 that showed record low cash costs driving the beat on our estimates.," said Mr. Sangmuah. "The company grew the cash balance during the quarter despite a heavy capex spend related to the pit pushback (Cut 2) supported by a 20-per-cent quarter-over-quarter growth in CFO.  With P5M volumetric expansion completed, we expect the capital spend to decline as the company completes the pit pushback by Q1/18, supporting a declining AISC, bolstering FCF generation and further strengthening the balance sheet.  We also expect improvement in operational efficiencies with encouraging grade reconciliation results and a recent mine site restructuring that should support continued operational improvements.  Overall, we believe that the operational performance at AKG is at an inflection point.  The stock trades at a 50-per-cent discount to peers which, in our view, is unwarranted and offers an attractive opportunity for investors as AKG rerates with continued operational execution."

His target remains $3.25. Consensus is $2.45.

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Believing "noise makes for a better entry point into the shares," Industrial Alliance Securities analyst Jeremy Rosenfield upgraded his rating for TransAlta Renewables Inc. (RNW-T).

In the reaction to third-quarter results that "roughly" met his projections, Mr. Rosenfield moved the stock to "buy" from "hold."

"RNW's shares are off 18 per cent since hitting an April 2017 high," he said. "RNW's shares have steadily declined since reaching an apex of $16.10 in April 2017. We attribute the late-summer decline to news that: (1) AIMCO (a large shareholder in RNW) decided to liquidate its position in the Company via a bought-deal designated trade (July 2017), and then (2) notice from Fortescue Metals Group Ltd. (FMG-AX, Not Rated) that (i) FMG would challenge the declaration of commercial operations at South Hedland, and (ii) FMG would exercise its right to acquire the 125MW Solomon gas asset for $335-million U.S. (August 2017).

"Shares may be overreacting to the downside; asset acquisitions expected to replace Solomon cash flows. We see the aforementioned items as transient, with no material negative impact on our fundamental outlook for RNW: (1) AIMCO may have been perceived as a long-term strategic sponsor (incorrectly); (2) the South Hedland COD dispute is immaterial (FMG is a minor counterparty), and (3) the Solomon sale was at fair value, and proceeds will immediately be used to (i) extinguish debt, and (ii) provide RNW with dry powder to redirect toward new growth opportunities."

His target remains $15. Consensus is $15.20.

"RNW offers investors a lower-carbon avenue to invest in the TransAlta brand, with access to (1) a diversified mix of contracted power assets, (2) growth tied to future acquisitions from TA1 or third parties, and (3) an attractive dividend," said Mr. Rosenfield. "With no material fundamental changes to our long-term outlook for RNW, the recent pullback in the share price offers investors 13-per-cent upside to our target, with an attractive 7-per-cent dividend yield."

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The outlook into 2019 for Brookfield Infrastructure Partners LP (BIP-N, BIP.UN-T) "looks solid," according to RBC Dominion Securities analyst Robert Kwan.

On Friday, Brookfield reported third-quarter financial results that "modestly" exceeded Mr. Kwan's expectations Funds from operations per unit was 81 cents (U.S.), topping his projection by 3 cents and up 13 cents year over year. The beat was due "primarily attributable to higher-than-expected contribution from Regulated Transmission and Toll Roads (stronger-than-forecast traffic volumes), with that being partially offset by higher-than-anticipated Corporate costs (partly due to lower-than-expected Other income."

Mr. Kwan noted: "Keeping with the themes presented at its recent Investor Day in September, BIP reiterated its focus on the four opportunity sets that it sees as potential drivers of future growth: (1) data infrastructure including communication towers and fibre-to-the-home networks; (2) municipal infrastructure including district energy; (3) water infrastructure including water supply (desalination plants) and water recycling (greywater and purification facilities); and (4) investment in Asia."

He raised his 2017 FFO/unit estimate to $3.08 from $3.04 to reflect the quarterly results. However, he lowered his 2018 projection to $3.40 from $3.56 to "to largely reflect the removal of the Reliance Telecom acquisition from our forecast, higher Corporate costs (partly due to a higher unit price driving increased base management fees) and foreign exchange headwinds (i.e., British pound and Australian dollar), factors which we expect to be partially offset by our expectation for stronger-than-previously forecast cash flow from the Toll Roads business, partly due to the Q3/17 results as well as the Indian toll road acquisition."

Maintaining an "outperform" rating, his target for the stock rose to $47 (U.S.) from $45. Consensus is $45.86.

"The increase is driven by the roll-forward of our valuation using our 2019 estimates with no material changes to the valuation multiples that we use for each individual business in the portfolio," he said. "Our new NAV [net asset value] range is $42.00 to $48.00 per share and we remain comfortable selecting a price target at the higher-end of the range based on BIP's significant liquidity position and history of executing accretive acquisitions as well as potential upside from the capital recycling program (i.e., almost $2/unit in value that we have not included in our NAV)."

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Genworth MI Canada Inc.'s (MIC-T) stock has finally caught up to its earnings, said CIBC World Markets analyst Paul Holden.

"Genworth reported its third massive earnings beat this year," he said. "The dividend was increased 7 per cent to boot.  …. The stock has finally re-rated to a level that we believe is appropriate in the context of financial results versus potential housing risks (1.0 times book value)."

Accordingly, Mr. Holden lowered his rating for the Oakville, Ont.-based company to "neutral" from "outperformer."

"Newer vintage years continue to develop very positively, indicative of higher credit quality," he said. "This is a positive tailwind for earnings. However, we think it is only prudent to assume more temperate economic and housing conditions in future years. We assume a loss ratio of 18 per cent in 2018 and 24 per cent in 2019 (versus  2017 of 12 per cent). Normalization of the loss ratio would be a headwind for further earnings growth.

"We assume the housing market will go through a cooling-off period in 2018 due to higher effective mortgage rates (BoC rate hikes and Guideline B-20). We see less of a direct impact on the insured portion of the market, which has already seen rate stress testing. We assume 1-per-cent volume growth for Genworth in 2018. In terms of housing prices, we expect price appreciation will be modest, providing less of a tailwind for claims losses. The company used $40-million of holding company cash to repurchase stock in the quarter. While the company is well capitalized with an MCT ratio of 165 per cent compared to an internal target of 157 per cent, management is expected to retain excess regulatory capital for another 12-18 months."

Mr. Holden raised his 2017, 2018 and 2019 earnings per share projections to $4.95, $4.76 and $4.46, respectively, from $4.89, $4.68 and $4.40.

His target for the stock is now $46, up a loonie. Consensus is $43.13.

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On the heels of a second consecutive "big beat," CIBC World Markets analyst Robert Bek upgraded TVA Group Inc. (TVA.B-T) to "neutral" from "underperformer."

"Our forecasts move higher on the back of a second consecutive strong beat in Q3," said Mr. Bek. "While we still remain cautious on TV and publishing assets overall (given the ongoing shift of eyeballs and ad dollars to digital alternatives), we believe that risks are priced in now, and that TVA shares have likely troughed. Indeed, we are probably a little late with our upgrade given the rally in shares year to date."

His target for the stock rose to $5, which is the consensus, from $4.

"TVA shares currently trade at 3.3 times 2018 estimated EBITDA, which is a material discount to peers," he said. "While the share structure, limited liquidity, and a lack of dividend explain much of the discount, given the solid numbers we have seen out of TVA for a few quarters now, we believe that valuation has troughed."

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Ecobalt Solutions Inc. (ECS-T) was upgraded to "speculative buy" from "hold" by Canaccord Genuity analyst Reg Spencer.

"Although we are reducing our target price slightly, with the recent decline in eCobalt's share price, the implied return to our target is 13 per cent, supporting our change in rating," he said.

The analyst's target dropped by a dime to $1.30. Consensus is $1.75.

Mr. Spencer made the move in a research report on battery materials companies in which he raised his demand forecast for lithium by an average of 8 per cent annually from 2017 to 2025.

"We expect tight market conditions to persist through 2018 (and potentially into 2019 subject to success of new project ramp ups)," he said. "We continue to anticipate a transient market surplus from 2019/20-2023, before the deficits return in 2024. Based on our updated demand assumptions, we estimate that by 2025 the lithium market will require 23 new projects with an average capacity of 25ktpa LCE (i.e. average 3 new projects per year) in order to satisfy forecast demand. Revised pricing forecasts call for increases of 16 per cent/13 per cent in 2018/2019 for lithium carbonate (min. 99 per cent Li) to $13,279 (U.S.) per ton and $12,659 per ton respectively. LT forecasts (2025) increase by 6 per cent to $11,806 per ton. Our spodumene concentrate (6-per-cent Li2O) forecast revisions include a 13-per-cent increase to 2018 estimates to $920 per ton, with LT increasing by 9 per cent to $749 per ton."

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BMO Nesbitt Burns analyst Alex Terentiew expects Copper Mountain Mining Corp. (CMMC-T) to benefit from higher grades in 2018.

He said that will translate into increased production and help it to "benefit from a tightening copper market."

Mr. Terentiew raised his rating for the Vancouver-based company to "market perform" from "underperform" with a target of $1.60, up from $1.30. Consensus is $1.59.

"We rate Copper Mountain Market Perform given its exposure to the price of copper, our preferred medium to long-term metal, but note that a strong copper price environment and weaker Canadian dollar will be needed to pay down its high debt load," the analyst said.

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TransCanada Corp. (TRP-T) is now Credit Suisse analyst Andrew Kuske's top pick among Canadian infrastructure stocks.

He moved the stock to No. 1 to replace Enbridge Inc. (ENB-T), which now sits as his second choice ahead of Emera Inc. (EMA-T).

"We view TransCanada Corp. as facing a number of catalysts following the Columbia Pipeline Group acquisition rerating earlier in the year," said Mr. Kuske. "Some of the catalysts, include: 1) news flow around the potential approval of Keystone XL in November; 2) TRP Investor Day on Nov. 28; 3) possible asset drop downs to TC Pipelines LP to help fund its capital program; and, 4) resolution of various Canadian Mainline tolling issues. The CPGX acquisition diversifies TRP away from the WCSB and provides further near/medium-term growth in a growing resource basin."

He has an "outperform" and $72 target for TransCanada shares. The analyst average is $71.09.

For Enbridge, he has a $64 target and an "outperform" rating. The average is $59.72.

"Following the close of the Spectra Energy acquisition, we believe Enbridge's platforms for growth are significantly improved for natural gas related infrastructure," he said. "Moreover, the deal aided diversification away from a dominant liquids business. From our perspective, the near-term growth to the end of the decade is relatively certain and a very substantial foundation exists for longer-term platform growth beyond 2020. We expect the near-term focus to be on synergy delivery, project execution (L3R) and, later this year, on structural self-help remedies with re-casting the affiliates."

In a research note detailing the firm's top picks, the lone other change came from analyst Anita Soni, who dropped First Quantum Minerals Ltd. (FM-T) from her industrial metals picks. She said: "We see better opportunities elsewhere."

Her lone pick for the list is Lundin Mining Corp. (LUN-T) with an "outperform" rating and $10.50 target, which is a penny above the consensus.

Ms. Soni said: "We rate LUN among our top base metals picks for the company's disciplined approach to capital management, defensive qualities, strong balance sheet, and positive free cash flow generation at spot prices."

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In other analyst actions:

TD Securities analyst Graham Ryding upgraded IGM Financial Inc. (IGM-T) to "buy" from "hold" and raised his target to $52 from $48. The analyst average target is $49.29.

Scotia Capital analyst Pammi Bir downgraded Canadian Real Estate Investment Trust (CAR.UN-T) to "sector perform" from "sector outperform" with a $50 target, falling from $52.50. The average is $52.25.

Mackie Research Capital Corp. initiated coverage of Organigram Holdings Inc. (OGI-X) with a "buy" rating and $4 target.  The average is $4.15.